According to Belinda Parmar, CEO of The Empathy Business, delivering bad news is a test of empathy.

Belinda Parmar is CEO of The Empathy Business where she and her team measure and embed empathy in the world’s largest companies. Below, Parmar shares tactics for conveying bad news, maintaining strong connections with remote employees and leveraging behavioral science to encourage empathy.

Stephanie Newman:What led you to start The Empathy Business?

Belinda Parmar: I had a company called Lady Geek, which was about getting the next generation of women to become tech pioneers. I loved doing it, but I realized a couple of years ago that our work was actually relevant to men. The defining factor wasn’t gender. It was empathy. The problem with talking about gender is that a lot of men just keep quiet. They don’t want to say the wrong thing. This work needs to embrace men, too, and that took me from Lady Geek to The Empathy Business.

Newman: How do you respond when people express skepticism about practicing empathy in business, as opposed to aggression or competitiveness?

Parmar: There are a lot of skeptics. However, enlightened individuals understand that empathy correlates with performance. I run an empathy index — we’re in our fourth year — and we measure companies’ empathy levels. We look at how many women are on their board, their CO2 emissions and what employees think of the company. The top 10 companies outperform the bottom 10 by 50%. That’s true every way you cut the numbers: by growth, productivity or earnings. More empathetic companies make more money.

Newman:How does the empathy index work and how do you collect that data?

Parmar:On a consultancy basis, we go really in-depth. We look at observational metrics, as well as attitudinal and behavioral metrics. To give you an example: blind copies on email. If a massive company has a high proportion of BCCs on email, they have a culture of disempowerment. That’s one metric we might use. Another is the percentage of time that senior vs. junior people speak in meetings. You don’t want your senior people talking all the time. You want to encourage your junior people to talk, because then you’re creating a culture of innovation, not a culture of deference.

Our public index looks at publicly available information. That includes a feed from Glassdoor with CEO ratings and employee reviews, diversity on the board and then the actual performance of the company.

Newman: What are empathy nudges? I saw on your website that you mention nudges as a tool to encourage empathy.

Parmar:I’m obsessed with empathy nudges. I used to think that big problems needed big solutions, but 70% of cultural transformations in an organization fail. The reasons they fail are because they take a lot of time, they’re costly and they’re often the pet project of one individual. Nudges are taken from behavioral science. They’re small changes that are low-cost and high-impact.

Right now I’m working with a bank, and we set up an empathy unit. The unit has developed nudges across all parts of the business, right from the bank teller scripts to the employee process for claiming expenses. Language is one of the most powerful tools we have. There was resentment between the front line and the head office, and we realized the word “head” implied superiority. As a result, we changed “head office” to “support hub.” Using the term “support hub” reinforced that the head office of the bank was actually there to serve the front line.

Newman: How do you teach empathy to employees who don't consider themselves to be naturally emotional?

Parmar:I believe that most people working in business are empathic. It’s not the individuals, but the organization. It’s the culture, the system, the processes, the policies and even the style of meetings. You have to change an organizational culture in order to make it more empathic, so that people are actively encouraged to express their emotions. It’s also about who’s driving the demand for empathy. It’s Millennials who are saying, “Actually, I will sacrifice money for meaning.” Research we’ve done shows that Millennials are three times more likely to feel comfortable sharing their emotions with their boss than someone over 40.It's the younger generation driving demand.

Newman: What do you suggest for people with remote employees across the world?

Parmar:It's more difficult. When you’re working remotely, the clarity of communication needs to be so good. You cannot afford any mishaps because you don’t have body language to sense how another person is feeling. We know that oxytocin is the empathy hormone. When you see a face, your levels of oxytocin rise, so where possible using FaceTime and Skype as opposed to just voice does make a big difference. So does building rapport and having ways to initiate difficult conversations.

Newman:I know that communicating bad news or negative feedback can be stressful for new managers. What advice do you give to for delivering hard news or criticism in an empathic way?

Parmar:It’s a test of your own empathy skills to deliver bad news. When you like someone or you’re very similar to someone, it’s easy to show empathy. The challenge is when you don’t like someone, when you’re really different from someone or your boss is putting pressure on you. In those cases, you want to find something to agree on. I don’t think you should shy away from the bad news, but always try and find some commonality.

For example, if an employee made a mistake on a major project, I would say something like, “I know you really wanted a good outcome on the project, and so did I. But the fact is, you did make a mistake, and the impact of that mistake” -- always talk about the impact -- “were x, y and z outcomes. That causes a big problem for me as your boss." And then I’d say, “Unfortunately this means 'x,' but I want to support you in your next journey. I’d really like you to be clear with me about how I can do that.”

Newman:What else do you recommend for founders and employees looking to contribute to a more empathic workplace?

Parmar:Define what empathy means to you as an individual and as a company. A lot of people translate empathy as being nice, but it’s not. The way I define empathy is the emotional impact that a company has on its people, meaning its staff and its customers in society. Some of the most empathic CEOs that I work with are very direct. It's about looking at your own awareness and trying to measure your levels of empathy by paying attention to things like how often you listen vs. talk. Start coming up with those small nudges that are low-cost and high-impact.

We’re all works in progress, and all of us can be incredibly unempathic. The one thing I’ve learned in this journey is that empathy can be learned. Your emotional intelligence and your empathy levels are malleable. They can change. It doesn’t matter where you are on the spectrum in terms of your empathy, or whether you’re a middle manager or a perfectionist CEO. We can all improve.

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